Index Numbers of the Prices of Farm Products

Abstract

The purpose of this paper is to give a brief summary of index numbers of the prices of farm products constructed by the United States Department of Agriculture 2 and by the various states.3 In 1908 the Bureau of Crop Estimates began an index number of the farm prices of ten crops.4 Average December 1 farm prices for the 43-year period, 1866-1908, were used as a base for computing price relatives. In the construction of a weighted average for the ten crops, these price relatives were weighted by values obtained by multiplying base period average prices by quantities produced in 1909. The formula employed is, of course, reducible to the aggregative with base year weights. The first-of-the-month average farm prices of the ten crops were used. This index was later shifted to 1913 as a base by dividing the series through by the index number for 1913. An index number based on the fifteenth-of-the-month farm prices of these crops was later derived from the original index by averaging the index for the first of a given month and the index for the first of the succeeding month. Presumably, this shift was made to make the index of crops more nearly comparable with the index number of farm prices of livestock based on the fifteenth-of-the-month average prices. Index numbers of the farm prices of livestock included six items.5 This index was constructed by using 1913 as a base and quantities marketed in 1909 as weights. Finally, these two series for crops and livestock, based on fifteenth-of-the-month average farm prices and relating to